Whitbread disposal of

Marriott hotels

Whitbread disposal of

Marriott hotels

14th March 200514th March 2005

Alan ParkerAlan ParkerChief ExecutiveChief Executive

Strategic frameworkStrategic framework October 2004 – Following business review, Whitbread sets out three strategic principles:

• Invest in businesses capable of generating significant growth and economic profit

•Release capital from under-performing and non-core businesses

•Return surplus cash to shareholders

Today’s announcement (subject to shareholder approval)Today’s announcement (subject to shareholder approval)

•Whitbread to exit operation and ownership of Marriott hotels

•At least £1bn expected to be realised by Whitbread within two years

•Significant return of cash to Whitbread shareholders

•Exit improves Whitbread’s return on capital

•Return of cash enhances Whitbread’s earnings per share

The transactionThe transaction•Whitbread and Marriott International establish 50/50 joint venture to hold hotel properties until sold

•Whitbread receives initial consideration of £710m cash

•Marriott International to operate hotels under long-term management contracts

•Total Whitbread realisation expected to exceed £1bn within two years as joint venture sells hotel properties

A complete exitA complete exit•Creates more value & realises more capital in shorter timeframe

•Marriott International’s management of hotels enhances asset values

— Elimination of franchise fee

— Cost synergies with Marriott International

Distribution of initial proceedsDistribution of initial proceeds•£710m realised upon completion of transaction

— £400m return of cash to Whitbread shareholders

— £100m reduction of Whitbread pension deficit

— Balance to repay Whitbread debt

Mechanics of capital returnMechanics of capital return•£400m to be returned via special dividend

— 135 pence per share

— Approximately 14% of market capitalisation

•Share consolidation to maintain comparability

•Circular sent to shareholders by 31 March 2005

•Extraordinary shareholders meeting 22 April 2005

•Sale to joint venture completes 5 May 2005

•Special dividend payment by June 2005

Transaction schedule(subject to confirmation)Transaction schedule(subject to confirmation)

Points of notePoints of note•Deadlocked joint venture - no intention to consolidate by either Whitbread or Marriott

•Goodwill – expect to recover as part of proceeds

•8 Whitbread Hotel Company properties with £75m NBV to be retained pending disposal

Foundations for the futureFoundations for the future• July 2004

— £505m acquisition of Premier Lodge• October 2004

— Business review announced• November 2004

— £79m disposal of Courtyard by Marriott hotels• March 2005

— Premier Travel Inn integration completes, creating UK’s largest hotels business

— Decision to exit Marriott and return £400m to shareholders

• April 2005— Arrival of Chris Rogers as finance director completes

new management team line-up

Further release of capitalFurther release of capital•At least £290m to come from joint venture asset sales

•Additional c.£300m to be realised from non-core and underperforming assets

— Whitbread Hotel Company retained assets

— German restaurants

— Pub restaurants ‘tail’

— Britvic (23.75% holding)

1,1581,158

515515

846846

545545

912912

1,0961,096

533533

Whitbread 2005Capital focus (net assets by sector) Whitbread 2005Capital focus (net assets by sector)

FY 2003/4£m

2004/5*

£m

Budget hotels Restaurants

Full service hotelsHealth & fitness clubs

*Pro forma estimate of assets based upon Whitbread interim accounts 2004/5 (excludes Marriott and Britvic)

Whitbread 2005Whitbread 2005•Leading positions in three growth sectors of the hospitality market

— Budget hotels

— Restaurants

— Health & fitness clubs

•Disciplined approach to expansion

•Opportunity for greater synergies

•Sustained creation of economic profit

Q&AQ&A

appendixappendix

Joint venture assetsJoint venture assets•46 hotels

— 6 London

— 31 provincial

— 9 Marriott Hotel & Country Clubs

•8,102 bedrooms

Joint venture assets (46 hotels)Joint venture assets (46 hotels)Marriott London Kensington Marriott Hotel & Country

Club

Aberdeen London Maida Vale Breadsall Priory, Derbyshire

Bexleyheath London Marble Arch Dalmahoy, Edinburgh

Birmingham London Regent’s Park Forest of Arden, Warwickshire

Bournemouth Manchester Airport Hollins Hall, W Yorkshire

Bristol City Centre Newcastle Gosforth Park Meon Valley, Hampshire

Bristol Royal Newcastle Metrocentre St Pierre, Monmouthshire

Cardiff Northampton Sprowston Manor, Norfolk

Durham Royal County Peterborough Tudor Park, Kent

Edinburgh Portsmouth Worsley Park, Manchester

Glasgow Preston Renaissance

Grantham Sheffield Derby/Nottingham

Huntingdon Slough Solihull

Inverness Sunderland

Leeds Swansea

Liverpool City Centre Swindon

London County Hall Waltham Abbey

London Heathrow York

Whitbread Hotel Company – retained assetsWhitbread Hotel Company – retained assets

Marriott Marriott Hotel & Country Club

Liverpool South Goodwood Park, West Sussex

Leicester (under construction) Hanbury Manor, Hertfordshire

Manchester V&A Treudelberg, Germany

Other

Norwich Nelson (Swallow)

The Brewery Conference & Banqueting Centre, London

• 8 properties

• £75m net book value

• Assets retained pending disposal

Operation of the joint ventureOperation of the joint venture• Joint venture board comprises six members: three

nominated by Whitbread; three nominated by Marriott International

• Joint venture to operate Disposal Steering Committee responsible for asset sales. Committee comprised of: two Whitbread representatives; and two Marriott International representatives

• Marriott International to provide management services to the joint venture

• Exit mechanisms ensure dissolution of joint venture